CU capital continues downward decline

MADISON, Wis. (4/3/09)--For the third consecutive month, credit union capital declined in February, according to Steve Rick, Credit Union National Association (CUNA) senior economist.

The movement's overall capital-to-asset ratio dipped slightly to 10.2% in February from 10.5% in January, according to the February CUNA monthly sample of credit unions.

"The total amount of credit union capital now stands at $88.5 billion, down from the high water mark of $90.8 billion set last November," Rick told News Now. "Credit union capital as a percent of total assets fell to 10.2 % in February, down from 11.1 % a year earlier.

"With the recession expected to boost savings and asset growth to double digits in 2009, the overall credit union capital-to-asset ratio could fall to around 9% by year end," he added. "Credit union buffers have not been that low since 1993."

Credit union savings balances rose 2.8%, to $728 billion in February from $708 billion in January. Share drafts led savings growth (7.7%), followed by individual retirement accounts (4.3%) and regular shares (3%). Money market accounts and one-year certificates increased 2.5% and 0.9%, respectively.

"Credit union savings growth is off to a strong start in 2009," Rick said. "Savings balances increased 4.4% through February, up from 3.8% for the similar period in 2008. Individual retirement accounts and money market accounts grew the fastest over the last year, rising 17.5% and 16%, respectively.

"Share certificate growth has slowed to 3% over the last year as credit union members were unwilling to lock up their funds into a low-rate term deposit and had expectations of interest rates rising over the next few months," he added.

Credit union loans outstanding decreased 0.14% during February 2009, compared with 0.06% during the same period last year. Fixed-rate mortgages led loan growth, increasing 1%, followed by home equity loans (0.4%). Used-auto loans fell 0.01%, as did new-auto loans (0.55%) and adjustable-rate mortgages (0.66%). Credit card loans and unsecured personal loans dropped the most, 2.69% and 1.89%, respectively.

The loans-to-savings ratio declined to 79.9% in February from 82.2% in January. The liquidity ratio increased to 19.9% in February from 18% in January.

Credit unions' 60-plus day delinquencies remained constant at 1.5% in February.

courtesy of cuna.org